SABESP announces its 2Q06 results

Transcription

1 CIA. DE SANEAMENTO BÁSICO DO ESTADO DE SÃO PAULO - SABESP Rui de Britto Álvares Affonso Chief Financial Officer and Investor Relations Officer Mario Azevedo de Arruda Sampaio Head of Capital Markets and Investor Relations Ph: (5511) / Fax: (5511) maasampaio@sabesp.com.br SABESP announces its 2Q06 results São Paulo, - SABESP Cia. de Saneamento Básico do Estado de São Paulo (Bovespa: SBSP3; NYSE: SBS), one of the largest water and sewage service provider in the world based on the number of customers, announces today its results for the second quarter 2006 (2Q06). The Company s operating and financial information, except when indicated otherwise, is shown in Brazilian Reais, in accordance with the Brazilian Corporate Law. All comparisons in this release, unless otherwise stated, refer to the second quarter of SBSP3:R$ / thousand shares SBS US$ (ADR=250 shares) Total shares: 28,480 million Market Value: R$ 6.5 million Closing Price:08/14/2006 Highlights Gross operating revenue grows 11.5% in 1H06 EBITDA margin reached 48.4% in 1H06 Net income totaled R$ million in 1H06

2 Page 2 of % gross operating revenue growth in 2Q06 and 11.5% growth in 1H06 HALF YEAR 1H05 1H06 Chg. % (+) Gross Operating Revenue 2, , (-) COFINS and PASEP (+) Net Operating Revenue 2, , (-) Costs and Expenses 1, , (=) Earnings before financial expenses (EBIT*) (+) Depreciation and amortization (=) EBITDA** 1, , EBITDA Margin (%) Net Income Earnings per 1,000 shares in R$ (*) Earnings before interest and taxes (**)Earnings before interest, taxes, depreciation and amortization In the first half 2006, Sabesp s gross operating revenue totaled R$ 2,878.8 million, an 11.5% increase in comparison to the same period of the previous year. EBITDA reached R$ 1,286.5 million with a 48.4% EBITDA margin. Net income reached R$ million. QUARTER 2Q05 2Q06 Chg. % (+) Gross Operating Revenue 1, , (-) COFINS and PASEP (+) Net Operating Revenue 1, , (-) Costs and Expenses (=) Earnings before financial expenses (EBIT*) (+) Depreciation and amortization (=) EBITDA** EBITDA Margin (%) Net Income (160.1) (47.7) Earnings per 1,000 shares in R$ (*) Earnings before interest and taxes (**)Earnings before interest, taxes, depreciation and amortization In 2Q06 Sabesp s gross operating revenue totaled R$ 1,422.0 million and the EBITDA totaled R$ million in 2Q06. The 6.9% increase in gross operating revenue was mostly due to the following factors: 2.4% increase in billed water and sewage volume; and Tariff readjustment of 9.0% as of August 2005, partially offset by a concentration of customers whose consumption was billed at intermediary tariff brackets. This drop in the average tariff was a result of the 2% drop in the consumption calculation period combined with lower temperatures in the period.

3 Page 3 of Billed volume The following tables show billed water and sewage volume per customer category and region in 2Q05 and 2Q06. WATER AND SEWAGE BILLED VOLUME** PER CUSTOMER CATEGORY million of m 3 Water Chg Sewage Chg Water + Sewage Chg 2Q05 2Q06 % 2Q05 2Q06 % 2Q05 2Q06 % Residential Commercial Industrial Public Total Retail Wholesale Total WATER AND SEWAGE BILLED VOLUME **PER REGION million of m 3 Water Chg Sewage Chg Water + Sewage Chg 2Q05 2Q06 % 2Q05 2Q06 % 2Q05 2Q06 % Metropolitan Regional Systems* Total Retail Wholesale Total *Non-metropolitan and coastal regions ** Figures not reviewed by the independent auditors 3. Costs, administrative and selling expenses Between January and June 2006, product and service costs, administrative and selling expenses recorded a R$ million, or 6.6% increase, when compared to the same period of Costs and Expenses 1H05 1H06 Change % Salaries and payroll Supplies Treatment supplies Third-party services (5.4) (2.5) Electric power General expenses (20.2) (24.2) Depreciation and amortization Credit write-offs Tax expenses Costs, administrative and selling expenses 1, , In 2Q06, product and service costs, administrative and selling expenses, increased by R$ 52.7 million or 6.4%. The main variation in 2Q06 were:

4 Page 4 of 11 Costs and Expenses 2Q05 2Q06 Change % Salaries and payroll Supplies Treatment supplies Third-party services (11.0) (9.4) Electric power General expenses (3.9) (8.6) Depreciation and amortization Credit write-offs (4.5) (7.5) Tax expenses Costs, administrative and selling expenses Salaries and payroll In 2Q06 the Company expanded its productivity per employee by 3.8%. The number of connections per employee grew from 640 in 2Q05 to 664 in 2Q06 and the number of employees dropped from 17,577 to 17,289, respectively. Salaries and payroll expenses moved up by R$ 65.3 million or 23.5%, due to the following factors: 4.63% readjustment, equivalent to approximately R$ 25.4 million, as of May 2006, affecting wages, social taxes, benefits and provisions; Full provision for a bonus payment per performance evaluation to employees in the amount of R$ 40.8 million in 2Q06, non-recurring Supplies In 2Q06, the figure moved up R$ 2.1 million or 7.4%, primarily due to the following factors: Vehicle fuel and lubricants in the amount of R$ 0.9 million or 16.1% mainly due to price readjustment as shown in the table below. Fuel Alcohol Gas Diesel Natural Gas Total Average readjustment (%) 35,3 12,7 10,6 5,2 SABESP s average consumption (%) Average impact in expenses (%) Network maintenance up by R$ 0.7 million; Vehicle maintenance up by R$ 0.3 million Treatment supplies Recorded a R$ 0.6 million or 2.3% increase. This result was mostly due to the increase in average treatment supply price, offset by the drop in consumption, primarily chlorine.

5 Page 5 of Third-party services In 2Q06, this figure recorded a R$ 11.0 million or 9.4% drop in comparison to 2Q05, from R$ million to R$ million, mostly due to: Technical services in the amount of R$ 9.4 million, highlighting costs related to the restructuring of capital market s operations, in June 2005, in the amount of R$ 7.7 million, non-recurring; R$ 2.5 million decrease in specific software expenses, regarding the implementation of the SIGNOS (geographical information system) system in April 2005, non-recurring; R$ 1.9 million decrease in residential connection maintenance and R$ 1.8 million decrease in pavement replacing at the São Paulo Metropolitan Region, mostly due to the discontinuance of some contracts regarding the Global Sourcing. These decreases were partially offset by the following increases: R$ 1.7 million regarding security, due to new hiring and existing contracts price readjustments; R$ 1.2 million with Telecom services; R$ 0.9 million with system maintenance in the São Paulo Metropolitan Region and; R$ 0.6 million, mainly due to the hiring of engineering services regarding the detection of leakage Electric power In 2Q06 recorded a R$ 0.4 million or 0.4% growth versus 2Q05, from R$ million to R$ million, in spite of the average readjustment and increase in produced volume General expenses In 2Q06, general expenses recorded a R$ 3.9 million or 8.6% drop in comparison to 2Q05, from R$ 45.4 million to R$ 41.5 million, mainly as a result, of lower provisions for legal contingencies Credit Write-offs Showed a R$ 4.5 million or 7.5% decrease, primarily due to the improved performance of loss recovery, through the reception of provisioned debits as not chargeable Tax expenses In 2Q06, tax expenses recorded a R$ 2.1 million or 30.0% growth versus 2Q05, from R$ 7.0 million to R$ 9.1 million, mainly attributed to CPMF tax in the amount of R$ 1.2 million due to the amortization of debt in the capital markets.

6 Page 6 of Financial expenses and passive monetary variation 4.1. Financial expenses In 2Q06 recorded a R$ 50.3 million or 28.2% drop due to: Financial expenses 2Q05 2Q06 Chg. % Interest and charges on domestic loans and financing Interest and charges on international loans and financing (13.1) (34.0) Taxes over offshore remittances Other financial expenses Provisions 20.2 (11.7) (31.9) (157.9) Total financial expenses (37.8) (19.3) Financial revenues Financial expenses net of revenues (50.3) (28.2) R$ 4.2 million increase in interest on domestic loans and financing regarding the 8 th debenture issuance in June 2005 and the credit rights investment fund in March 2006; R$ 13.1 million drop in interest on international loans and financing due to the amortization of the Eurobond that matured in July 2005; R$ 31.9 million decrease in provision for interest related to legal contingencies, due to lower provision during the quarter. Financial revenues grew R$ 12.5 million or 68.7%, mainly as a result of interest over settlements, agreements and interest over investments Passive monetary variation Passive monetary variation recorded a R$ million increase, resulting from a lower Real appreciation versus US Dollars (0.4%) in 2Q06 in comparison to 2Q05 (11.8%). 2Q05 2Q06 Chg. % Monetary variation over loans and financing (4.3) (19.2) Exchange variation over loans and financing (278.0) (104.0) (255.6) (111.5)

7 Page 7 of Operating indicators* As shown below, the Company continues to expand its services. Operating indicators 2Q05 2Q06 Chg. % Water connections (1) 6,431 6, Sewage connections (1) 4,817 4, Population directly served water (2) Population directly served sewage collection (2) Number of employees 17,577 17,289 (1.6) Operational productivity (3) (1) In 1,000 units at the end of the period (2) Million Inhabitants at the end of the period. Does not include wholesale services (3) Number of water and sewage connection per employee * Figures not reviewed by the independent auditors 6. Loans and financing The Company s total debt to be paid until the end of the year is of R$ 351 million, out of which only R$ 66 million is denominated in US Dollars. () DEBT PROFILE INSTITUTION and TOTAL onwards DOMESTIC Banco do Brasil Caixa Econômica Federal Debentures ,718 FIDC SABESP I BNDES Others Interest and charges Domestic Total ,006 4,949 INTERNATIONAL World Bank Société Génerale IDB Eurobonds JBIC Interest and charges International Total ,472 Total , ,547 6,421

8 Page 8 of Conference call and webcast English: August 17, :00 pm US EST Ph: +1 (973) Conference code: Portuguese: August 17, :00 am US EST Ph: (5511) Conference code: Sabesp For additional information please contact the Investor Relations Department: Mario Sampaio ((5511) / maasampaio@sabesp.com.br) or Angela Beatriz Airoldi ((5511) / abairoldi@sabesp.com.br) Statements contained in this press release may contain information that is forward-looking and reflects management's current view and estimates of future economic circumstances, industry conditions, SABESP performance, and financial results. Any statements, expectations, capabilities, plans and assumptions contained in this press release that do not describe historical facts, such as statements regarding the declaration or payment of dividends, the direction of future operations, the implementation of principal operating and financing strategies and capital expenditure plans, the factors or trends affecting financial condition, liquidity or results of operations are forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and involve a number of risks and uncertainties. There is no guarantee that these results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.

9 Page 9 of 11 Income Statement Brazilian Corporate Law R$ thousand 2Q06 2Q05 % Sales/Services Gross Revenues 1,422,064 1,330, Water Supply - Retail 748, , Water Supply - Wholesale 64,204 58, Sewage Collection and Treatment 609, , Other Services Gross Revenue Deductions (Cofins/Pasep) (108,656) (98,891) 9.9 Net Sales 1,313,408 1,231, Cost of Goods and/or Services Sold (666,685) (594,793) 12.1 Gross Profit 646, , Selling Expenses (132,177) (131,550) 0.5 General & Administrative Expenses (74,472) (94,352) (21.1) Net Interest Income (Expense) (147,438) 84,263 (275.0) Operating Result 292, ,913 (40.9) Non Operating Expenses (Income) (558) 1,428 (139.1) Income Before Taxes 292, ,341 (41.2) Provivision for Income Tax/Social Contribution (114,639) (155,145) (26.1) Provivision for Deferred Income Tax/Social Contribution 6,907 3, Extraordinary Item Net of IT and SC (8,780) (8,780) - Net Income 175, ,741 (47.7) Shares Outstanding (1000 shares) 28,479,577 28,479,577 - EPS (R$/1000 shares) (47.7) Depreciation and Amortization 151, ,538 (1.1) EBITDA 591, ,188 (5.2) % of net sales 45.0% 45.5% -

10 Page 10 of 11 Balance Sheet Brazilian Corporate Law R$ thousand ASSETS 06/30/ /30/2005 Cash and Cash Equivalents 336, ,949 Accounts Receivable, net 1,214,648 1,115,441 Accounts Receivable from Shareholders 225, ,742 Inventory 32,035 25,040 Taxes and contributions 22,161 30,421 Other Receivables 43,904 47,830 Total Current Assets 1,874,372 2,271,423 Accounts Receivable, net 297, ,687 Accounts Receivable from Shareholders 823, ,727 Indemnities Receivable 148, ,794 Judicial Deposits 30,723 15,395 Taxes and contributions 310, ,293 Other Receivables 48,879 31,064 Total Long-Term Assets 1,660,031 1,503,960 Investments 740 5,100 Permanent Assets 14,165,702 13,981,250 Deferred Assets 15,389 35,277 Total Permanent Assets 14,181,831 14,021,627 Total Assets 17,716,234 17,797,010 LIABILITIES 06/30/ /30/2005 Suppliers and Constructors 88,032 46,553 Loans and Financing 642,461 1,420,176 Salaries and Payroll Charges 224, ,579 Provivion for Judicial Pendencies 10,921 30,979 Interest on Own Capital Payable 381, ,526 Taxes and contributions payable 145, ,115 Taxes and contributions 72,348 69,980 Other Payables 98,612 86,110 Total Current Liabilities 1,662,890 2,136,018 Loans and Financing 5,778,076 6,041,965 Taxes and contributions payable 244, ,998 Taxes and Contributions 139, ,615 Provision for Contingencies 602, ,084 Pension Fund Obligations 299, ,736 Other Payables 110, ,362 Total Long-Term Liabilities 7,174,956 7,319,760 Capital Stock 3,403,688 3,403,688 Capital Reserves 100,760 72,824 Revaluation Reserves 2,483,566 2,574,594 Profit Reserves 2,470,269 1,863,389 Retained Earnings 420, ,737 Shareholder's Equity 8,878,388 8,341,232 Total Liabilities and Shareholder's Equity 17,716,234 17,797,010

11 Page 11 of 11 Cash Flow Brazilian Corporate Law R$ thousand Description Jan-Jun/06 Jan-Jun/05 Cash flow from operating activities Net income for the period 503, ,111 Adjustments for reconciliation of net income Deferred income tax and social contribution (3,187) (15,590) Provisions for contingencies 25,556 68,015 Liabilities related to pension plans 29,977 34,255 Loss in the wirte-off of property, plant and equipment 2,321 2,332 Loss in the write-off of assets Gain with the sale of property (1,007) - Depreciation and Amortization 297, ,999 Interest calculated on loans and financing payable 321, ,763 Foreign exchange loss on loans and financing (39,789) (264,052) Monetary exchange loss on interest on own capital Passive monetary exchange variation and interest 9,917 12,812 Active monetary exchange variation and interest (6,911) (2,479) Provisions for bad debt 124, ,257 (Increase) decrease in assets Clients (91,228) (212,297) Accounts receivable from shareholders (29,067) (95,155) Inventories 4,035 4,564 Other accounts receivable (19,875) (14,542) Changes in Long Term Assets Clients (86,182) (60,233) Accounts receivable from shareholders (46,243) (13,608) Judicial deposits (6,866) 794 Other accounts receivable (15,959) (3,088) (291,385) (393,565) Increase (decrease) in liabilities Accounts payable to suppliers and contractors 10,251 (5,025) Salaries and payroll charges 106,919 62,351 Taxes and contributions 17,555 (6,157) Other accounts payable (20,965) 2,308 Contingencies (20,000) 444 Changes in Long Term Liabilities - - Pension plan (7,416) (6,695) Other accounts payable 2,288 10,674 88,632 57,900 Net cash from operating activities 1,061, ,473 Cash flow from investing activities Acquisition of property, plant and equipment (331,506) (240,663) Sale of property, plant and equipment 2,188 - Increase in Deferred Assets (55) (53) - - Net cash used in investing activities (329,373) (240,716) Cash flow from financing activities Loans and Financing - long term Funding 320,528 1,061,414 Payments (838,963) (706,227) Interest on own capital payment (158,155) (65,552) Net cash from financing activities (676,590) 289,635 Net increase (decrease) in cash equivalents 55, ,392 Cash and cash equivalents at the beginning of the period 280, ,557 Cash and cash equivalents at the end of the period 336, ,949 Change in Cash 55, ,392 Additional information on cash flow: Juros e taxas pagos de empréstimos e financiamentos 346, ,422 Capitalization of interest and financial charges (6,829) (14,411) Payable income tax and social contribution 221, ,405 Property, plant and equip. received as donations and/or paid in 21,940 7,533 COFINS and PASEP taxes payable 219, ,130 Balancing accounts - (715)